This is a good question. The decision is a clinical one.You will find that certain dentists are more comfortable doing crowns and there are others that are more conservative, would like to conserve as much tooth structure as possible and prefer to do onlays and inlays. I believe that a well made inlay can last a very long time without having to impinge on the gum tissue. Again it is a clinical call and you need to have sufficient tooth structure to warrant doing the inlay.I do not feel that the treatment should be dictated by the insurance companies. There is nothing wrong with a crown but it is less conservative.
if most of the natural tooth structure is gone, you are probably better off with a crown, which covers the tooth entirely and protects it. the tooth may first need a "buildup" if the existing filling has come out, comes out during preparation of the tooth, or has decay around it. I do not like inlays personally. ONLAYS are much better in that they also cover the tooth, but i use gold, not composite or porcelain, which can break. Gold requires the least amount of tooth reduction, and in my opinion, when done well, last the lngest. -- they go "in" the tooth not "on" the tooth. By definition there is unprotected tooth structure and the tooth can crack if you bit into something hard enough. Inlays and onlays are difficult to do well, they require precise hands and a very good lab.